* Israel Corp would retain Israel Chemicals, Oil Refineries
* Israel Corp shareholders to receive shares in new company
* Shares in Israel Corp jump 8.4 pct
* Chairman: Will restructure Zim's debt within six months
(Adds comments from chairman)
By Tova Cohen and Steven Scheer
TEL AVIV, June 26 Israel Corp, one of
Israel's biggest holding firms, plans to spin off some of its
less-profitable assets into a new, listed company in a bid to
boost the value of its core businesses and attract a broader
range of investors, it said.
If the separation is approved, shareholders of Israel Corp
will also hold shares in the new company, it said in a
statement. It estimated the separation process would be
completed within 6-12 months.
Under the plan, Israel Corp would continue to hold two of
its most lucrative and stable companies - speciality chemicals
maker Israel Chemicals (ICL) and Oil Refineries
, Israel's biggest refinery.
That would mean divesting itself of a bundle of assets
analysts view less positively.
The announcement on Wednesday prompted an 8.4 percent rise
in the company's shares, outperforming a flat broader index.
Upon completing the break-up process, Israel Corp said it
would refrain from making investments in new companies.
The separation of Israel Corp's holding in Oil Refineries
will also be considered in the future, it said, which would
leave Israel Corp holding only its cash cow - ICL.
IC Power, Qoros, shipping company Zim, chipmaker TowerJazz
and IC Green would be held by the new company whose
place of registration for trading would be on an international
Israel Corp chairman Amir Elstein said it was considering
listing in Asia since much of the focus of these firms was in
Asia and emerging markets. "Nothing has been ruled out but it
will not be an Israeli-only listed company," he told Reuters.
Every shareholder in Israel Corp will receive a new share in
the separated company alongside each existing share in Israel
Corp, the company said.
Before the reorganisation, Israel Corp will work towards
resolving Zim's $2.7 billion debt load through a
restructuring with banks, shipyards and bondholders. "We know we
must close the Zim issue in six months and we will," Elstein
He said Israel Corp will continue to invest in Zim after the
restructuring. "It's a good company once we fix it (the debt
problem)," he said. He added that Zim needed more time to pay
off their debt.
Noam Pincu, an analyst at the Psagot brokerage, said that
Israel Corp trades at a steep discount of 46 percent to its net
asset value, with the market valuing the company's assets
excluding ICL and Oil Refineries at a negative $900 million.
"We believe this move will lead to a significant narrowing
of the discount and ultimately it will stabilise at a more
reasonable level for holding companies - 20-25 percent," said
Pincu, who raised his rating for the stock to "buy" from "hold".
Pincu said Zim's debt restructuring before the spin-off goes
ahead, "which will increase the level of certainty regarding the
Shares in Israel Corp, which is controlled by billionaire
Idan Ofer, were up 8.4 percent at 2,190 shekels at the close.
"Our goal is to increase exposure of the company's holdings
to both a broader and more focused investor base in the areas of
activity relevant to each holding," Elstein said.
Qoros, a joint venture between Israel Corp and Chery
Automobile, is also expected to launch its new car
before the spin-off happens, Pincu said.
He valued the profitable IC Power, which is building a power
plant in Peru, at $1.3 billion and said it could go public in
($1 = 3.60 shekels)
(Editing by Pravin Char)